New Condo Loan Rules in Colorado Springs: What Buyers and Sellers Need to Know in 2026
If you are buying or selling a condo in Colorado Springs this fall, the rules changed. Not the price of the condo, not the interest rate, but the process a lender uses to decide whether the building itself qualifies for a loan. These changes are already affecting how long condo deals take to close, which buyers can qualify, and which listings sell.
The Treasure Davis Team has been watching this closely because it touches a big part of our local market. Here is what changed, why it matters in Colorado Springs, and what to do about it.
What Changed
In March 2026, Fannie Mae and Freddie Mac updated the standards lenders must follow when financing condos. A few of those changes made financing easier. Several made it tougher. The three that matter most:
1. The "Limited Review" shortcut is gone. For years, most condo loans used a simplified Limited Review, where the lender approved the building with a short questionnaire and did not dig into the HOA's full finances. Under Fannie Mae Lender Letter LL-2026-03, that process ended on August 3, 2026. Most conventional condo loans now require a Full Review, meaning the lender collects and reviews the HOA's complete financial package.
2. HOA reserves have to be stronger. The minimum reserve requirement rose from 10% to 15% of the HOA's annual assessment income, or a qualifying reserve study, for loan applications dated on or after August 3, 2026.
3. Master insurance deductibles are capped. As of July 1, 2026, the HOA's master insurance policy can carry no more than a $50,000 deductible per unit. That matters in Colorado, where hail and wind claims have pushed many associations toward high deductibles to keep premiums down.
There is some good news mixed in. Fannie Mae expanded its project review waiver for buildings with 10 or fewer units, and established buildings where more than half the units are investor-owned no longer face the old cap that kept many of them from qualifying for conventional loans.
Why It Matters in Colorado Springs
Condos and townhomes are one of the most affordable paths to ownership in the Pikes Peak region. In July, condos and townhomes in El Paso County had a median sales price of $305,000, compared with more than $500,000 for single-family homes. That price point makes condos a go-to option for first-time buyers, military families stationed at Fort Carson, Peterson, and Schriever, and investors.
But that segment is already under pressure. The same July report showed 680 condo and townhome listings in El Paso County with only 134 sales, and an average of 52 days on market. Andrea Warner, chair of the Pikes Peak Association of REALTORS, pointed to new condo financing requirements as a likely headwind heading into fall, along with rising HOA fees and insurance costs.
Colorado has its own added pressure. Statewide insurance increases have pushed up master policy premiums, and many associations have passed special assessments to cover them. A building that is short on reserves or carrying a high deductible may now fail a lender's review, even if the unit itself is in great shape.
The Biggest Change You Will Feel: Time
Because the lender now needs the HOA's full financial documents, timelines depend on how fast the HOA's management company responds. Condo deals that used to close in 30 to 35 days are realistically taking 45 to 55 days or longer.
For buyers, that means planning your lease end date, moving dates, and rate lock around a longer window. For sellers, it means a longer stretch between accepting an offer and getting to the closing table.
If You Are Buying a Condo in Colorado Springs
The HOA's finances now matter as much as the unit itself. Before you write an offer, the Treasure Davis Team recommends:
Ask for the HOA budget and reserve study early. Find out whether reserves meet the new 15% standard. Colorado law already requires sellers to provide specific HOA disclosures under the Colorado Common Interest Ownership Act, so use them.
Ask about the master policy deductible. If it is above $50,000 per unit, talk to your lender right away.
Ask about special assessments, past or planned. A low monthly HOA fee is not a bargain if the association has been underfunding reserves.
Talk to your lender before you go under contract. FHA and VA loans use their own separate condo approval lists, so a building can qualify for one loan type and not another. That is especially important for military buyers using VA benefits.
Know your backup option. If a building does not meet the guidelines, it is considered non-warrantable. That does not make financing impossible, but non-warrantable loans usually come with different terms, so it is worth a conversation with your lender first.
If You Are Selling a Condo in Colorado Springs
The sellers who do well in this market are the ones who get ahead of the lender's questions. The Treasure Davis Team suggests:
Pull the HOA's financial package before you list. Budget, balance sheet, reserve study, insurance declarations, and any assessment history. Having it ready can save weeks once you are under contract.
Check your building's status. Find out whether your HOA has run into financing issues before, and whether the reserves and deductible meet the new standards.
Market to the buyers who can close. If your building is VA or FHA approved, say so. If it is a small building of 10 units or fewer, that may now be a financing advantage worth highlighting.
Price with the longer timeline in mind. Days on market for condos already run longer than for single-family homes in El Paso County. Pricing right from the start matters more than ever.
Talk to the Treasure Davis Team
Condo financing is getting more selective, but the condo market in Colorado Springs is not going away. Buyers who understand the rules can still find great value, and sellers who prepare can still sell well.
The Treasure Davis Team has helped families buy and sell more than 3,500 homes across Colorado Springs and the Pikes Peak region over the last 20 years. Whether you are eyeing your first condo or getting ready to sell one, we can help you check the HOA, line up the right lender, and plan a realistic timeline.
Call the Treasure Davis Team at (719) 249-2020 or visit treasuredavis.com to get started.
